Petropavlovsk’s production on track but low gold price weighs

THE CHAIRMAN of Petropavlovsk yesterday warned that there might be more job cuts and that management bonuses would be cancelled once again, as the Russia-focused gold miner prepares for another challenging year.

Peter Hambro, who founded the FTSE 250-quoted company, told City A.M. that “life is not easy for any of the miners” and that volatility in the gold price makes it difficult to predict how the company will fare this year.

He added that the wide variation in gold demand between the physical and paper markets made it difficult to predict the gold price.

Petropavlovsk, which announced 720 job cuts last July and took a $600m (£361m) writedown last August due to the plummeting yellow metal price, yesterday said that 2013 production hit 741,200 ounces, which was in line with the company’s guidance and analysts’ estimates.

Implementation of a previously announced strategic development plan will result in “significant unit cost reduction for 2015-19”.

The company expects to produce 625,000 ounces of platinum in 2014.

“With production in line, 2014 guidance unchanged and net debt lower than expected,this release should come as some relief to the market,” said Westhouse Securities. Shares rose 4.9 per cent yesterday.